5 Jul 2017

Dairy prices edge down but whole milk powder strong

3:22 pm on 5 July 2017

Dairy prices have edged lower in the global dairy auction overnight.

The average price fell 0.4 percent to $US3303 a tonne.

It's the second consecutive auction where prices have eased.

Most of the products fell in price, but the key whole milk powder price - which determines the payout to dairy farmers - rose 2.6 percent to $US3111 a tonne.

Prices around $US3000 are at a level where where most farmers will break even.

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Graphic: Global Dairy Trade

Butter and anhydrous milkfat (AMF) prices have been trending steadily upwards for the past year, and overnight eased slightly.

AgriHQ analysts say there's been concern buyers will no longer be able to absorb the record prices for butter and AMF, but it's too early to tell whether this is the start of a longer term downward trend.

Butter prices are still more than double what they were this time last year and AMF prices are 80 percent higher.

AgriHQ noted that there were more winning bidders at this event, including more from North Asia, and they were buying more product than they did at the previous auction.

Dairy co-operative Fonterra is forecasting an opening payout for the new 2017/18 season of $6.50 per kilogram of milk solids. The forecast for the just-ended season is $6.15, though this needs to be confirmed in September.

Commodity prices rise

Commodity prices are continuing to strengthen after the growth in dairy prices.

The ANZ Bank's Commodity Price Index rose 2.1 percent in June, when compared with the month before.

That was led by further gains in dairy prices - especially butter, cheese and skim milk powder last month.

Meat, seafood and fruit prices also rose, while aluminium prices fell.

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